Public refuses to believe that house prices have gone down

Consumers have given a decisive clue as to why asking prices have been slow to register any decline – most simply do not believe that house prices will go down.

Indeed, more than one in five confidently expect them to go up.

Whilst Rightmove has finally reported a dip (of 3.1%) in asking prices within the last month, asking prices have still held up remarkably well. They are 1.2% up on a year ago, and at £232,144 are some £70,000 ahead of ‘actual’ prices reported by the Land Registry.

But while agents have been in the firing line for alleged over-pricing, a new survey –ironically by Rightmove, which frequently tears its hair out over the issue – goes some way towards solving the mystery of the reality gap.

The massive poll, of over 26,300 consumers, shows that two-thirds (63%) do not believe house prices will be lower in a year’s time than they are now. They expect them to remain the same or, according to 22%, to be higher.

Less than one-third (three in ten) expect lower prices – unchanged from a year ago.

Despite ongoing economic gloom, the optimism among consumers is almost universal. While Londoners are the most optimistic, with 29% of consumers expecting higher house prices in 12 months’ time, in Wales – the most pessimistic regions – only 35% are predicting price drops over the coming year.

A baffled-sounding Miles Shipside, director of Rightmove, said: “The public’s belief in the value of bricks and mortar seems to defy the deteriorating economic situation. This is a clear message that the majority of consumers view the property asset class to be as ‘safe as houses’ in these times of economic uncertainty.”

He added: “It should be remembered that in spite of the overall confidence expressed in this survey for property prices, transactions volumes are still well down on historic norms. Economic stability in the UK and Eurozone will be needed before many are willing or able to re-engage with the property market.”

The survey did, however, reveal some extremely localised opinions.

For example, in the North-West 26% of respondents in Preston expect prices to be higher in 12 months’ time, compared with just 14% in Lancaster only 20 miles away.

Shipside said: “Local variations highlight how patchy confidence can be, depending on an area’s housing mix and wealth demographics.

“The wealthier middle-to-upper price brackets may be feeling fairly blast-proof from any further economic eruptions, and see a less turbulent outlook.

“Meanwhile, some of the more cash-strapped terrace and semi dwellers may feel far more exposed to the negative pressures of reduced mortgage availability and job uncertainty.”

Bellefield launch by Bellway Homes

I was invited to the launch of the new Bellefield development by Bellway homes last night. Bellefield, the ex training Facility for Everton FC for over 50 years, has been bought by Bellway homes, the national housebuilder and will be developed into 74,four and five bedroom detached executive properties. The launch took place in the amazing Sakura Japanese restaurant on Exchange Flags in Liverpool. It was great to see some Everton FC legends at the launch as well as the Bellway Execs and sales team. Loads of photos were taken so I'll get some and post here soon. In the meantime check out this great new development at Bellefield.

Support your local businesses

Please support your local independent family run businesses (like ours here at Roberts, Edwards & Worrall).

A new venture Laser Skin Clinic has recently opened its doors in Woolton and in West Derby. Go and be treated like a VIP. Please show your support by checking out their website at thelaserskinclinic.co.uk or go to their facebook page facebook.com/thelaserskinclinic and you could win over £500 worth of Skin treatments!

Roberts, Edwards & Worrall pleased to support Imagine Appeal

Michael and Ashley from Roberts, Edwards & Worrall attended The Clothes Throw last night, a stylish way to support the Imagine Appeal at Alder Hay Childrens Hospital. The event, which was an auction of celebrity clothes modelled on the cat walk at Liverpool Ones fabulous Palm Sugar lounge. Thousands of pounds were raised on the night and loads more cash is still being donated throughout this week as part of the Clothes Throw event. Check out http://www.theclothesthrow.com/ for all the details.

BBC report - Three Reasons for rising rents

Three reasons for rising rents

By Kevin Peachey Personal finance reporter, BBC News

The rental market has created some tough conditions for tenants

People are cutting spending on food and heating in order to finance their rent payments, according to the housing charity Shelter.

In August, the cost of renting a home rose at its fastest rate for a year, and tenants increasingly missed payments, LSL Property Services found.
So, as housing charities warn that rents are becoming unaffordable for some, how did the market end up like this?
Are the roots of the issue found in long-term housing strategy, or is it all to do with the state of the UK economy?
Here, those involved in the market explain what they consider to be the key reasons behind rising rent levels.

Not enough homes have been built

Shelter say that private rents are unaffordable in 55% of English boroughs, having already risen at one-and-a-half times the rate of incomes in the 10 years to 2007.
The "primary reason" for this, it says, is the failure to build enough homes in recent years, and in recent decades.
David Newnes, of LSL, who owns letting agents Your Move and Reeds Rains, says the supply of rental properties has not increased enough to keep pace with the rising number of tenants.
The lack of newly built properties also comes as the UK population is growing.
New house building is at a post-war low, with just 134,000 new homes built in the UK in 2010, government figures show.
That was the lowest number in any year since 1949, and just 31% of the peak number for building, which was 426,000 in 1968.
Since 1990, the building of "social" housing by housing associations has been lower than new local authority building seen in the 1960s, 1970s or the early 1980s.
Housing Minister Grant Shapps says that councils will now be rewarded for freeing up disused public land to build on.

Renting is a lifestyle choice

The Shelter research suggests that rent levels are more affordable in cities such as Manchester and Birmingham, than in some rural areas.

Miles Shipside, Rightmove: "This problem is going to grow and grow"

But estate agents say that demand is higher, even in the cities, because people like the flexibility of renting, rather than owning a home.
"Historically, we have been a nation of home owners, but we have started to see a shift in the way people live, a shift which could well gather pace in the future," says Carolyn Mellor, of Manchester-based estate agents Homes4u.
"Now more people are making a lifestyle choice not to commit to the financial burden of a mortgage, and to benefit from the flexibility of renting in the long term rather than the short term.
"Inevitably, this means that less old stock is coming back onto the market, and the supply-demand balance is being disrupted."
Simon Ward, director of the Dorset-based estate agents Mr Green, says: "With many young people still reluctant to take on the responsibility of a mortgage, there is a temptation to talk of a Generation Rent - suffering ever increasing rent, but unwilling or unable to take out a mortgage."
A recent report for the Royal Institution of Chartered Surveyors suggested that home ownership in England has been falling since 2003 and has also fallen in the US, Australia, Austria, Finland and the Irish Republic, among others.
If current trends were projected forward, then by 2025 the percentage of home ownership could be below 60% - lower than most other European countries.

First-time buyers cannot get on the property ladder

The banking crisis had a significant impact on those trying to buy their first homes. Banks had to pull back their lending, and be more careful who they were going to give mortgages to.
As a result, many first-time buyers realised they needed to save a lot more than they expected for a deposit. In the meantime they needed somewhere to live - and that often came through the private rental sector.
"With more people seeking to rent, rents will inevitably rise. It is pure supply and demand," says Suzanne Bradshaw, of Derby-based independent mortgage broker Mortgage Arena.
"As long as mortgage criteria remain as they are at present, namely stringent, rents will remain very high."
Matt Hutchinson, director of flat and house-share website Spareroom.co.uk, says: "People who would normally be looking to buy their first property after renting for a few years are either unable to because they cannot secure a mortgage, or are reluctant to because of all the uncertainty surrounding interest rates and property prices so are renting for longer as a result.
"The knock-on effect is that existing rental properties are off the market longer, and with fewer new rental properties becoming available, the supply-demand balance is completely off kilter."
This has also provided an opportunity for investors, if they can afford it, says Mr Newnes, at LSL.
"With high demand and the expectation of high rental income, there are a growing number of investors turning to the buy-to-let market as an alternative investment opportunity," he says.
"In response lenders are now offering a wider range of mortgages, at more affordable prices, which is driving investors to purchase properties which would have normally been bought by home buyers."

This weeks Liverpool Property paper is out!

Link here to see this weeks Liverpool Property paper

Marketing Madness

What is going on! Rightmove says the average marketing price of properties on their property portal is  £233,139 (Sept 2011). The Land Registry tell us that the average selling price is £162,347 (Aug 2011). A MASSIVE difference of over £70,000! If your average house was on the market for £230,000 would you accept offers of around £160,000?? Who is causing this gap? Are sellers being greedy? Are they inflating the price to test the market? Are they showing off or being cheeky and really not expecting to sell? Is it the Estate Agents overvaluing to get the business. Its true to say that sellers are savvy and will on most occaisions invite multiple agents to offer them a true market appraisal! Well Rightmove and many other property spokespeople are saying prices are too high. This index proves it!

As an example - we at Roberts, Edwards & Worrall have just agreed a sale on a nice semi detached property marketed at around £170,000, The sale was negotiated and agreed at £165,000. A good deal for both buyer and seller. Another, very similar property in the same road has gone on the market with another local agent. This agent, known for their sometimes under hand tactics, are marketing theirs at £185,000. Yes, definately pushing the price up trying to get a better sale (and commission no doubt)! Thats not too bad, and the chances are that, if they want to sell, the sellers will need to bring the price down. Well, today, just further up the road, a smaller house with a smaller garden, with an extra room has just been put on the market for £280,000!

Its no wonder so many overpriced houses are on the market and why there is such a gap between the marketing value and the selling price.

To all sellers- get your valuer to explain how he/she has valued your property and get them to show you proof! Get them to talk about what sales are happening in your locality and to show you some comparible evidence. Get your Agent to market your property at a realistic price, else you may never sell!